Stored value accounts are associated with product and/or service providers. For instance, a stored value account can be associated with wireless telecommunications service providers (sometimes referred to as carriers). For instance, a customer may purchase a $20 PIN to enable $20 of wireless service, wherein the value of the $20 service is stored in and accessed through a stored value account.
Typically, to enable the $20 (or other value) of service, the customer first purchases the PIN (associated with a stored value account), typically at a merchant terminal. The merchant provides the customer with a receipt that includes the PIN. The receipt may also include other information, such as the PIN's associated value and provider. The customer then accesses a central system, such as via an IVR or website, and provides the PIN and the customer's account number to which the PIN's associated value should be added. The central system then adds the value ($20) to the customer's stored value account. The account may be managed by the central system or another provider.
PIN-enabled stored value accounts, such as prepaid long distance phone accounts, are generally used in the telephone industry to allow customers to pre-purchase long distance calling time. Each of the accounts has an identifier such as an identification number (e.g., a PIN) associated with the account. The identifier may be printed on the receipt provided upon purchase of the PIN. Additional associated identification information can be magnetically stored therein or printed in a barcode. The identifier is also stored in a file in a database maintained by the PIN issuer (or central processing system).
Many merchants, such as merchants of physical products, allow customers to return products, for instance during a grace period after purchase. On the other hand, some merchants do not allow product returns. Some merchants require that the product be defective (which may be determined upon inspection), and others allow refunds for any reason whatsoever, leading to increased consumer security. Other merchants may allow returns only after an inspection of the product reveals that the product is in like-new condition. More liberal return policies can lead to increased sales and superior customer relationships because customers are more likely to purchase from a merchant who will refund the purchase price and allow customers to return the product if the customer is unsatisfied in any way.
Return policies may incur costs to the merchant. Customers might damage the product or cause some wear and tear on the product before returning the product, decreasing its value to the merchant. Many merchants require a full inspection of the product after a return, leading to additional shipping and inspection costs. There are also restocking and/or repackaging costs. Many returned products cannot be resold for their full, original price. Instead, merchants often mark down the price to reflect that the product has been “used” or pre-owned, and the difference between the original price and the marked-down price is lost.
Like merchants of physical products, some PIN-enabled stored-value card merchants also allow customers to return stored-value cards. According to the traditional model, the selling merchant could accept the return of the stored-value card at the merchant's discretion. The customer would return the PIN to the merchant, and the merchant would accordingly refund the purchase price of the card to the customer. The return of PIN-enabled stored-value cards differs from the return of traditional physical products because the product is the stored value account, not the physical card per se. Thus, there is typically no danger that the product is physically damaged, since the “product” is information stored in an account.
However, in one traditional model, there is a significant risk that the customer has accessed and/or depleted all or a portion of the stored value account, thereby decreasing (or negating) the value of the product. This risk arises from the fact that at the time of return, the stored-value card merchant does not have access to the card's stored value account information. Thus, the merchant is unable to determine whether the customer had already used all or a portion of the stored value account. By refunding the purchase price to the customer, the merchant bears the risk of loss in the event that the customer had already depleted the value below the refund amount.
Related U.S. Pat. No. 6,575,361 to Graves et. al. (“'361 Patent”) discloses another model, which is a system and method for returning a stored-value cards. The '361 Patent is used for physical stored-value card that can be swiped at a terminal. Merchant terminals send return requests to a central processor. Terminals are initially authorized via a “setup card” so that a central processor will recognize and authorize stored-value card-related requests from that terminal. After setup, each request from the terminal includes a terminal identifier, and the central processor authorizes the request if the terminal identifier is a valid identifier for making the particular request.
The card refund process is as follows. A customer purchases a stored-value card from a merchant terminal. If the customer decides he or she does not want the stored-value card, the customer brings the card to another authorized merchant terminal for a return transaction. The merchant terminal inputs the card number at the terminal (such as by swiping the card) and passes the number together with a terminal identifier to the central processor. The central processor determines whether the number corresponds to a stored value account that has not been redeemed, and it also determines whether the terminal was authorized to make the return request. Based on the determination, the central processor sends a return authorization to the merchant terminal, and the merchant terminal may refund the customer in return for the card. The card's PIN is not used in the return process.
It is desirable to provide an improved system and method for returning a PIN after purchase and refunding value associated with the PIN wherein the status of the PIN is verified during the transaction. In this way, merchants can determine whether a PIN-enabled stored value account has been activated or depleted before refunding the purchase price of the stored value account.